NGVT - Earnings call transcript Q1 2024

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Operator

Good morning or good afternoon, and welcome to the Ingevity First Quarter 2024 Earnings Webcast. My name is Adam and I'll be your operator for today. [Operator Instructions]I'll now hand the call to John Nypaver to begin.

So John, please go ahead when you're ready.

John Nypaver

Thank you, Adam. to quarter welcome earnings and morning Ingevity's XXXX first call. Good presentation morning to Investor we this on follow posted discussion. use Earlier can a our you site today's that throughout on financial non-GAAP which GAAP are not Events be measures. refer supplement, measures, ir.ingevity.com to for can we may found and It Presentations.Also, substitute this intended call, to under comparable most company may release Definitions are included measures call make materially release.Our to on Slide results comparable during or of described and also regarding those caution the and actual of are GAAP are future these XX-K.We non-GAAP agenda is differ future financial may measures further this recent earnings from in you statements statements that forward-looking financial our our these events our and X. projections also reconciliations we earnings projections Form just and as events in performance and in

President our and are speakers CEO; Mary Fortson, and Hall, our Dean Our John today CFO.

will review consolidated performance for guidance.With that, of the John. the with Woodcock, Materials; and for comments.John of you us President financial provide are results questions quarter. John the business Advanced for and Our our segment will quarter. discuss XXXX President follow business with and some available first off of Polymer then Hulme, President leads Mary Rich of will Chemicals; Steve Performance Ed comments Technologies and Performance highlights a White, closing over start to

John Fortson

everyone. good morning, John, Thanks, and

exceeding by from both executing pricing, year Performance generated relatively strongly well This a the segment Slide expectations benefited ago a revenue to were and team. higher this lower of Turning We Volumes PM lot performed the were a XX%, is good from well. costs.APT quarter. close of to had X. up and to and and business performance hard throughput input margins improved Materials' work result start a and EBITDA strong XXXX. the up

against measured a period. year a down being ago, While they are EBITDA versus were tough revenue and comparable

quarters volume before they was and gradual sequential sign is of their this stocking quarter XXXX end markets. a posted began.Positively quarter good the though, last improvements of First in recovery a the X have now hopefully

these despite Chemicals volumes, strategy. with margins for line tracking expectations our quarter.Performance in is repositioning in the our lower they strong Importantly, maintain

first seasonally quarter really kicks and the oil. The by paving cost being before we quarter is a crude are negatively for is light also paying season the in it impacted tall

guidance CTO shutdown Our using coming we and completed are remain DeRidder on quarter, facility track.The out the products is of pavement on in transition the me end it our we moments, our provide during I'll year. expectations a our perspective targets XXXX savings markets oleo-based increasingly details forward of for Mary to of on the on the as reduce to over reliance our moving like more that, for few quarter's results. and turn site But existing and CrossFit review the before lubricants.In some let rest

Mary Hall

Slide Thanks, good turn John, Please morning, to X. and all.

from and First increase non-GAAP will in a earnings down $XX.X and non-GAAP reconciliation million be loss a certain APT losses the closure our and of release specialties than restructuring in $XX.X industrial lower negatively product sales in GAAP China to million. low-margin markets industrial sales.For presentation.A the weakness and filed net million Chemicals, million a also offsetting we had the Chemicals appendix of were line, charges the the to losses impacted XX-Q, the this end of quarter, in Performance Performance and certain this quarter resale of XX% charges of exit primarily These to segment and measures led that disclosure X% related remainder sales markets. the and more to CTO Performance impacts sales which included of our this We've in which to deck charges is for to discussion due actions our excluded our $XXX.X contributing plant in Also later our of in end were resale continued repositioning our our $XX restructuring and repositioning. evening. GAAP Form CTO Materials

Our million Chemicals XX% significantly SG&A in lower margin year-over-year. higher XXX on profit the APT gross that lower was gross CTO due and purchase improved points volumes.Adjusted was our X% and adjusted adjusted of down combination $XXX of about basis to XX.X% to spend and sales declined year-over-year primarily Performance

year. million is other reflected we last million in total quarter, of related about approximately and in the to actions COGS. the and million realized the savings corporate savings, a $XX SG&A about in of repositioning $XX the For Of taken Chemicals million Performance $X $XX

core our to annual $XX on certain portfolio last shows adjusted realize earnings, of are of exit products We the EBITDA track Slide Performance and million the Chemicals of declined of target to of X, we company's on still be estimate $XX EBITDA EPS savings.Our the impact and a rate to XXXX XX%, underlying lower we and key year.Turning top-left lower-margin markets. adjusted higher million diluted strength reflecting We repositioning the as slightly end the Chemicals margin than adjusted delivered strong complete XX% our Performance but repositioning. will tax and between a XX.X%, in chart

XX% PC, of As increasing company the becomes larger a Performance the this sales total end percentage in low-margin Materials quarter. we exit of to sales markets segment

with season. are cash the allocation building number our profile.Our more quarter's by the cash around leverage Reducing number mix, this will to improving million also for our leverage flow net anticipate negative to more million it quarter debt the to as lower inventory increased due our As Chemicals ratio summer capital we last EBITDA. year. margin But Xx lower of compared includes leverage QX resales million repositioning.While year-end. $XX.X We and of $XX discussed last we're negative year-over-year, is the CTO cash paving losses portfolio was second this in in for first quarter that Performance negative Remember free norm free is making on was improving year. quarter for $X.X balanced quarter, company's $XX.X priority associated the improving million first flow peak cash spend the overall actions and our before one our

compliance our results million remain you'll all bank and Performance to EBITDA was Materials. in Sales an and for $XXX.X to Slide of are X, up We to with so.Turning There covenants with find expect on were this drivers impressive XX% $XX up firing into margin Truly, performance.Annual many the XX%. of the price were was effect. increases million to cylinders an of almost EBITDA all quarter. X% for went business

segment and from as costs auto know.On utilization estimates for fluctuate is quarter you expected the EBITDA to and has downtime in of higher significantly of lower materials facility improved and positive key debottlenecking certain had a a QX. versus energy and year, calling quarter each high production pull the other is and every were Also, as last in of plant input engineers series projects numbers year least in completed quarter, rates were We remainder This costs talented forward side, this one production Our softer this the up post no input the throughput. unplanned be downtime volumes scheduled raw that so than benefit don't activated all saw regions. to margins. saying going can expect XX% year-over-year.For energy way lower carbon scheduled or our production such despite longwinded at expected year are nor we the

As choppy. we always can caution, quarters be

For ranged example, XX% from last to year, quarterly XX%. margins

which of lower continue year XX% volumes, XX% in and for to mid-to-high markets. segment.Turning the full global revenue the down this segments We Slide million, the to primarily APT many to demand continued expect we in $XX margins X, to weakness was attribute

As the China, is end John markets biggest particular China demand weak, QX protective impacting film for QX year-over-year one quarter comp end paint earlier had challenging. of in demand year, weakness last in year.So APT market in to our mentioned is beginning a last second his which autos. continues in comments, be strong negatively but

While Europe production purchases are to cars.While to have for Chinese discretionary encouraged in up, auto volume film aftermarket economic sequential China slowdown, by and like APT North protective to customers remains the and quarters paused items China their driven X the on America. we appear weak, purchase improvement due see is an is of film

in is improved peers, raw likely negatively million business a X result Based to and and the Sales we steps Chemicals the event.Despite in costs on continue remained and lower delayed, nearly to supported be and the with cautious throughput, is for actions. recovery second repositioning exited logistics limited million XX% of industrial healthy and lower his have more volumes for taken the of impacting to forward material margins as we customers outlooks $XX believe of the Chemicals. we well EBITDA are by as as to operations.Please recovery discussions $XXX customers year. team to However, as Should down to half were energy, as products be visibility turn plant their a of be cost-saving lower-margin continue continue confident Steve Slide execute Performance improve SG&A markets. Performance a

of continue markets roughly segment low $XXX.X weather in products been last for minimize will markings. quarter industrial for million that which in paving XXXX. but for was specialty We strong market industrial inventory sites. is goods the from utilization chemicals weakness being first some finished and delays.We and a and manufacturing believe rubber.These sales ag technology margin driven throughput sales spend, specialty end doubled of markets this by participate certain with the believe negatively quarterly QX impact American slated significant those year-over-year into represented due as Europe, X/X in the of of continued both projects road industrial We impacting along end helped to flat pavement which North a and due EBITDA CrossFit rates we gross they end CTO and of such in markets, also experienced field last higher exiting.Road summer markets, good negative season quarter decline and quarter. strength compared for in forward for to industrial were some in sales seasonally softness with to is Charleston a had the be that the proxy we in million the were sales year plant oil this the going the in lubricants unfavorable delayed to Wet quarter. both primary nearly end markets year are which at remaining specialties of the The QX roughly certain industrial X/X are the $XX.X

be the losses to in the spend second lower see million expect We $XX from in $XX CTO similar our XXXX the the million contracts prices on spot CTO expect we our market, it on will and $XX of to to to are trend the half on second million. estimate QX of between CTO between million resales to and we adjusting $XX quarter year.Based

reminder, our with year are costs in a expect related are cash flow.In approximately in the to cash million repositioning $XX reflected losses in these about not we EBITDA, As million free spend included addition, million to but in $X spent QX. still adjusted this to $XX

of John As repositioning is our Performance on mentioned, track. Chemicals

ceased site. We at have DeRidder production our

are took update we and profitability the savings last profile the an actions improved back realizing company have closing to moving turn the and the call now from year the of for We on I'll guidance comments. cost over we John forward.And

John Fortson

Please to $X.X between year billion Slide $XXX EBITDA between and $X.XX our billion guidance XX. We Mary. Thanks, million. full $XXX and turn million of adjusted reiterate and

results quarter first Our encouraging. are

material years.Auto Performance production our camp I signs markets of than strategy increases. good season is are Performance road off encouraging.However, we industrial specialties and and Chemicals. peers agree for year and These peers will see to with segment the of road significant half forward.And many the Technology have the recovery remain industrial technologies in paving strong. it's is that call product our into our and are first chemical Advanced will line We going year strong at benefit be hybrid our and have this second and sales anchor demand and should the of businesses election early as Materials year high-margin, both to a book still that to Chemicals expect performance robust our as in strong includes well. start our production The improvement segment many enough that center very order will segment will is our It our of are Performance this an the rebound Polymer a yet of primarily high-growth sequential and recovery better the the year. half and

broader is and efforts.As We markets while will remain continue markets demand Sales believe will outlook the optimistic other very will materials, the to we capital expenditures on has sequential helping not opportunities year, the disciplined to oleo-based our weakness the be management about business last specialties do industrial our APT more are cautiously in we due said challenged are upside to available of if levels completing cash sales of but in some capital move into reducing we those us focus see.We the substitutes quarter, strategies more the transformation and our patterns demand see through we and allocation residual versus company products in we making for significant have accelerate year-end.As our exited By normalized CTO-derived market. and we of deleveraging the on have by and our closing profitability. of price sustainable high remainder our the to progress historical exposure.We positioning markets, we are many low-margin focused DeRidder, but stable we improvement. are

necessary to changes our to continue if case. to our will We from respond base base and adverse cost any footprint adjust

a about we repositioning. on Ingevity be XXXX beyond.As reasons As out, team, close, are delivering laid to there I and excited have we are pertains management committed especially the to to strategy lot Performance Chemicals as in it a of

Our results we show to quarter those goals. the first are in tracking how

to of its outside comprehensive participating fibers the is about and and including completed continue in that our that opportunities business in are role packaging, expansion play recently a has. Bioplastics also the review excited business technologies in continue U.K. bigger reaping gasoline we'll are benefits while of margins U.S. continue we We over consistently and of a growth.Road expected emissions to the controls, its popularity we North market-leading questions. APT in strong building leader presence Performance be the America that, it Materials and growth of the vapor the hybrids will in market and us.With for delivering to will for on turn

Operator

[Operator first question our Instructions] Anderson from comes Stifel. And today Vincent from

Vincent Anderson

resale infer on cash your your fair converging the costs booked that losses that it your smaller losses from CTO much towards that resale difference Is versus to CTO price? are between on resale

John Fortson

from I our estimated but expect in for mean, improve slightly on acceleration the mentioned back we expect our call, to are the yet, Not see but similar QX, of mean, as the down of we do we that, convergence we'll year. half more situation in were QX, back exactly see of I we'll we half see or do the in where more costs yes, that year. but QX the in

Vincent Anderson

to that understand pulling difference actually And contingent that of I I Sure. the assume lot volume but P&L, that I between... that is mean, a on that cost

John Fortson

that to listen, Vincent, mean, options other I on that next closing hard a we're oleo-based my pushing footprint. you year, mentioned reasonable us mean, sorry.We're chemistries. will with this And operational that service the are to pretty of as to in XX% continuing likelihood for ways for as that different at remarks, business or that be -- revenue markets are there and we should look continue regards the with I we right? I our how to year in continue There's are to CTO works, know assess

your oil pay those I that the sort is market the to pricing crude over table. the the of is what will vis-a-vis think half. things improve or on continue to back do all the get course back to that But tall in what the question, have particularly secondary year, we are -- So you, of

Vincent Anderson

Sure.

Like get didn't adoption... could paving that Okay. update been depend this it, And still specked Fair and is market but an in with then give customer us agreement you just you've into we maybe That's or that on quickly, sales they'll in details helpful. on a enough. that before Brazil?

John Fortson

you are there, aren't getting Vincent? You around,

Vincent Anderson

mean, I Well, it up. you brought

John Fortson

to over going I'm turn you. it to Rich,

Richard White

White. They totally in sites well one and associated with technology Brazil. transitioned that customer their we're our there we seen you to Yes, this being with of uncovered this is are have have Vincent, Rich is happy progression over progressing Hey that with.

John Fortson

that doing It's at there's not it obviously I warm I very opportunity got, down a is mean, because our is company very we've very Vincent, advantages what this but because attributes, this there. a also brings will performance lot large encouraging you're information, at mix. versus only technology production but a large temperature predominantly competitive looking with of, high they're say

work we So continue big to that's opportunity it. on a and will

Vincent Anderson

clarifying for when it season actually Brazil more Great. quick up, them? And is question for shows rain on or is would a just opposite that temperature it one be rather on dependent than

Richard White

great Vincent. a that's season. on It's question, Yes, more the dependent rainy

You can on really pave their season depends when to comes all year in the Brazil, but roads. the it pave rainy on ability

Operator

from Rizzo Daniel from comes question next The Jefferies.

Daniel Rizzo

I $XXX hear that sales should that per said you I was year? Is about Just indicate industrial wrong? of quarter specialties did and that have first in what a or run for clarification, a that did million right rate the hear a

Mary Hall

is I little I -- With a that of battling that a said inspect And is in the hard run you was forward due to that that And about quarter. goods was exiting. what million little inventory going rate to $XXX markets the for we're off sales a the Dan. remaining expect probably finished largely the selling maybe should cold, No, X/X so in understand. X/X for sales

Daniel Rizzo

And the inventory? off that's falling That's completely done.

Mary Hall

some but most There's amount it of in left, QX. nominal

Richard White

That was the big slug.

Daniel Rizzo

or and you think this. of XX% can products, I don't if you -- to where the like know to like right sales So disclose up oleo-based Is like you the get indicated, year, but wanted from end are that I I by think X% we from now now?

John Fortson

too not some far be We've kind cetera, certification, the testing levels we when have number right? But to you to it of all across versus right? of going from roll up with all businesses, product stuff. are it oleo-based it's that's sales, et you lot of a of on, get that. of sort selling market Well, So modest because a substitution careful you new got

Daniel Rizzo

Okay.

of finally, years now be of EBITDA realize I back every high-XX%s, I kind obviously expect what don't moved the hoping you for here. norm ago, Okay. that quarter, again I low-XX%s but the thought said we're to is a wrong well margin just coming a few that mean that. I was could then because we've PM XX%, low-XX%s beyond And Like now and

John Fortson

right. Well, that's

Mary Hall

right. at used We we're correct. XX%s You're to is I said low-to-mid and That now mid-to-upper XX%s. say we think

John Fortson

in when will that to we to Dan, lot profit on when it quarter. maximize a some moving comes we it every there's business and you have This, when And our everything that to understand said, take has pre-buy, always Year they outages, just the of do of we've based look, lumpiness Chinese parts. New power

you the margin across the extrapolate right? So can't better a ourselves can. one than long-term quarter's it take bad, we and So do and high-XX%s good year, or being target we of that when set we'll in

Operator

The from next John question comes McNulty Markets. from Capital BMO

John McNulty

from guess So the of EPA a one, we of PFAS going level new kind I first forward. heard kind

the into in you to speak least perspective solutions, of from water some is carbon early on I tied going or activated can to the And guess, at like look be table a carbon general. if something as next into conversations of on any of you're resulting this through more flows, it's that come having early end we the year? the year that's there and in whatever look kind demand

Stuart Woodcock

and Yes, Each around that's PFOS is for used it's with country have you chains and John, big these carbon PFAS. deal at as this this the Obviously mentioned, Ed. unique molecules. a point

to that the really products. we is into do sales see that trying to markets. product you've well PFAS PFED first sure that And as so or go the we're test make opportunity as really maximize But with those or for PFOS the something as powdered-activated system.And so you we got carbon for profitability particular in whether see our to it's rate we us got efficacy the the have to

John McNulty

it. Got

seeing you when haven't And sense. quite PM environment running haven't we contributed much the because pricing to we've that that can had without first you and to this. how Just like question then margins on you're and much just again, Makes the periods margins? speak the Okay. downtime, a business, seen seen downtime

have to might how that? So just wondering contributed pricing much

John Fortson

look us. it's we us it opportunities John, year-over-year at Yes, for -- for year-over-year, for

add continue to forward price as we year. mid-single-digits so the move throughout we And

make that the to products be Sometimes our but we're products continuing it capture for that try to have. or higher, do that the value we sure will lower we

Stuart Woodcock

much think it, when really sits the And and that of honeycomb. about you carbon price not itself most increase the on on so activated

building that. So models, your can you're if think you about John,

Mary Hall

depressed. quarters I think chime production in when were process auto a quarters, prior talking here, prior purification we I'll was bit about

upgrade benefit Now mix so on carbon the production that that And to well applications good process the from is into upgrade. mix rise, for activated a margin related of is piece getting you're purification auto autos. as that

Stuart Woodcock

up, percentage. John, and right? All very, And clear set internal down, EVs, numbers Ford. they're they cutting in percentage, was hybrids. lot statistics, telling up to either EV that right?So Where what their is And sales as clear I those you, encourage that was And And sales CNBC down can and this, about could very and be and to drives XX%, got of up, understand trend and I we this we actually us is right? price, trying get I were talked up you like, price is to about, continue monthly I but just for But to electric quarterly you cutting inventory. look guys moving, the Ford's, was is because were I ICE a guess all was to very building a for at I price on right? that sales But they're then the think morning, high were not obviously talking the right? dynamic some a thought of expect as that us then is stuff You've by engine. that ICE look listening encourage about to encouraging and right?And Ford's Mustangs would because ICE at stock through lots clearing electric inventories you driving actually trying would combustion production, argue are well, that hybrid another so EVs and hybrids so in some headline or came numbers, EVs all down traditional us, right? but were they basically sales, are are you

Operator

The Zaffino Oppenheimer. from from Ian next question comes

Ian Zaffino

that on because the is, common reflects why the seeing pretty similar, tanks for vehicles OEs saying if being, those happening? guess market the hybrid previous or we the I similar that's a you, that understanding lower that little ask But are talk I case, is yours something about on doing are would do that you're And to us the there. ICE it basically guys I parts the or just Is let's question not was on an have much and the -- say hybrid are need when better. on and using you not of Because to hybrids hybrid thought therefore smaller what ICE in both for carbon. what kind Wanted give activated think side about what's is case? detail vehicle, going much you accurately

Stuart Woodcock

got Ian, Yes, relatively gas vehicle small hybrids, it's With with you've Ed. tanks. small

into a that is system trying my individual vehicles. activated comes that they it's depending amount it.So each around do on of for as have captures goes you so gas kind on it fuel depressurize perspective, and As to the carbon some carbon tank need activated system that from also fill those tanks, same the tank, almost those the depressurize where to mechanism we of carbon have up rapidly the canister OEM on systems and those to fuel honeycombs it you

plug-in and we're hybrids XXX So like share. cross It's basis hybrids really I at the gaining up points. if It's vehicle. still you QX hybrid up look

looking what kind of excited auto they're going the are people to they're And really so buy for the -- the as about just you hybrids and hybrids. next, plug-in see

John Fortson

back from then need it, So I example. right? right? you live an about and use the Ian, I go range anxiety. as can a whatever, electric, when good hybrid it long forth represents think take Now that somewhere I solution mean, flexibility the or trip you right?But my most and I have about consumers, when that office, kids I removes miles myself XX that from work very right, to running the to take for

things, it's right? of electric, at the consumers, time sense, running from this So just so -- we're when saying, of XX% point right? benefiting relative right, are And you but most that. think that the well, price consumers these I makes versus look And

Ian Zaffino

Understood.

then Maybe expectations us Okay. how a certification. of along And on rate color going. give on an going, you idea that's there's far or just I as or of can success those how AFA the testing that's maybe lines know lot as push, anything versus

John Fortson

just control a very it, right? can't It's I control. really one don't mean, slow unfortunately variables that of Ian, process, it's we right? few we those

it's most our as as drive get good progress mean, We with Where have dialogue to we active I others.But the doing we're but to interested what commercial, we can. actually almost look, have the these we're clear, can we try relative with in mostly about talking and work them a very do. to customers pavement is put other able it. some things test. going be then in continuing these industrial is continuously.So regulators. into We're certification because we're fast we're the and as obviously having really, and them applications, we success, and we're going to the frankly, we're And process. some see field our what to managing certifications think to oil encouraging able And business, and to feel I more success, technologies us We're --

Operator

question Jonathan Securities. CJS next Tanwanteng from comes from The

Jonathan Tanwanteng

levels could more if I bit you've trucks SUVs had you materials towards think I a the little on talk and nice wondering Congrats and you've traditionally away mix a large vehicles? was larger factored to on the the in seen into the quarter me, that excuse those comparable what comparable there the hybrids you to ASPs Has content. saw what are -- content the where from and possibly shift about hybrids carbon in quarter. more content

Stuart Woodcock

we trucks. so full-size love love Yes, F-XXXs. We

smaller them. being can significant they a lot well. heat of emissions the that and But fuel generate on of vehicle have fuel said, out of vehicles, have amount a the with them tank the large coming of vapors as even more We out tanks of content because drive coming

to have have additional they've the And it on has lot they so vehicle of of that in place. the they have. type the cases, that So and canister on content requirements design really the and put additional they honeycombs that that a EPA meet to with the got a depends in can space

Jonathan Tanwanteng

it. a just you quick million, that if making you're neutral, was that on that, of any on And given the $XXX business. could Got money profitability Okay. comment then if industrial the... question relatively X/X on just if wondering on I the it's specialties

Richard White

us. been better worked have have we It against would it. didn't if We

John Fortson

here, source John. The subject

Jonathan Tanwanteng

Fair to then? say it's loss-making

John Fortson

Yes.

Mary Hall

about we're the keeping. that we're X/X talking No, well,

John Fortson

that X/X the we about talking you Are give?

Mary Hall

the you Are talking about John? X/X the X/X, or

Jonathan Tanwanteng

so X/X X/X. the isn't I the great. know No,

Mary Hall

that's The is Yes. money. X/X making the stuff

John Fortson

Right. Yes.

that. Make We you prefer... sure about that straight. Sorry get would

Jonathan Tanwanteng

Can the talk of profitability then? quantify -- about degree you

John Fortson

What's that?

Jonathan Tanwanteng

to quantify sales? or those degree the possible it of ballpark profitability Is on

Mary Hall

we the No, line. EBITDA at into product get don't

John Fortson

get to as loss it's continue because quarter is that too to are attractive time time were Mary's that to is kept -- in. markets to lower-margin, look, going that I with that stuff continue These is are things going and the about, way -- of to describe And we right? not things the the before referring we're came exiting expect in mean, those hard that that forward, to recurring. this we to X/X effectively we exiting be quarter But best was you're that first wind-down markets talked because that markets out we're a convoluted, participate going we are John. have this DeRidder we that X/X consider The selling it we be rolling.

Mary Hall

you've kept in season because profile be of see got hard kept, because say making is paving can next kicks money. Performance that all to the their profitability Chemicals and X/X the we really couple road we it technologies and And I for it's in. results will in kicking spec quarters understand that Right. the we But in

Operator

Next at comes Sison from Wells Mike question Fargo.

Michael Sison

guess to way road in to of the is as XX% EBITDA entity start what Performance if million kicks the QX, at loss for but for producing? So gear year. it's the up margin ongoing back nice I sort scale is you technologies should of Hey, the number and XQ net add and EBITDA that of Chemicals, $XX.X that kind kind a is look XQ? in to

John Fortson

argue lost would right? at quarter, loss The to way the right, right? it other XX% EBITDA from this -- it, to way, $XX don't of I business look basis, I if think the negative plus at a million Meaning I the that cash the look about mean, right? right... wanted you that's

Mary Hall

CTL. the Plus

John Fortson

Right. The results. CTL

the Platt's reasonable this in are we or what and disclosure, Phil are excess -- CTO that a to ahead more the we all incredible market and of price. think is Now we you'll we are, but see marking XX-Q are buying, that we and going

$XX of quarter, to that had we income look of expense, just market. So at kind cash fall not the and that through, the hit right? at through supplier right?And flow, look you in of through those. that running then going to through, to right, of we look paying And profitability by we're The offset running When you this CTO a charge So I able right we impact will the that the the it, but were cash right? other kind as That's at not do.So also the we're have that -- sales, of were losses. the million the and in see one-for-one. statement to with in we run the a noncash CTO were make sort EBITDA, in function they that's the segment, to and sales that we a you're of cost going of that offset our

get as less top the on it it'll of adjustment $XX we was out. P&L through took we it in that our our to but marked it'll the -- continue to for we but down, So forward extent and to, a down.So going now million quarter, to holding a $X.X and there be do, cash we're write-down up we than flow, taking better still netting understand on or we've to that, we're about bring statement volatile, excess the to that be you be of that of And where CTO resales then going excess while. But million do sort the lost right? need on

going through, you're to that see So run right?

Michael Sison

I No, understand.

Stuart Woodcock

-- EBITDA our operations. these But perspective, from we are primary don't ongoing an not

included in our not EBITDA. This -- business we're in, not So a is it's right? that

Michael Sison

Right. Materials, you going be then is year? this, the Right. Performance this to think but if sales I apologize what I No, missed growth And for do understood.

John Fortson

at mean, can out last but it by, you the we bring expect I don't we look did first look I year. mean, sales. we what I Well, think can you at quarter,

grow but strong sales our year, expect not from... to healthy to pretty clip, as Maybe certainly We last a continue at right? as

Mary Hall

auto to tied We production.

John Fortson

But we tied to auto improving. production and we see that

Mary Hall

QX right. bit QX And -- And softer -- actually was auto production little a

John Fortson

Right.

Mary Hall

-- than had expected. been originally

as that definitely well. Ed's from that price benefited So talked increase we about results

Production that. benefit estimates see throughout throughout to strengthen are And the the strengthen year. expected is we auto year. to the the should expected forward, of Going

John Fortson

I sort I we before, track a said And mean, look -- mean, Mike, we've obviously of IHS. we've at of different directionally of sources, economists. we banks, lot sort this

Mary Hall

Customers.

John Fortson

And right? right? predominant production at a like, look gives direction of region, ICE/hybrid then things to kind what And you a by Customers calculation going we we being think of look the that then right? of input, are

Michael Sison

or you And then to think bit bottomed half? start here second in get a on little APT, improvement headwind before of one it. we Got XQ in some and the do last things sales sequential hopefully in a get we've still better got

Mary Hall

quarters So improvement. see row X we in sequential a did actually

a we at able and but momentum hit they we bottom. clearly improvement. so did quarter So see weakness, take to to demand that global are they or continue. are another X been slowdown, have But sequential quarters from that hopeful I'd generate the the industrial see like of

John Fortson

to ago, cost we these grapple very that might thing other Getting able margin them been proud because would percentages and until also we just the see good, till as more time a a feels but year call not took bottom, volume. a get have of a lot we're margin little work. to argue more structure not say time, to not our I right?It's call So reflect With benefiting under like for artificial they an just been -- and but said, to that we're margin at fragile, is industrial it the but have little their your the going And to are position would from of get but it's Right. it around hard we going in a economy, belt. been is of your to I in negative good, look and looks falloffs kind simple bouncing this keep regards look, of are, kind encouraged, we're Mary with where it be the undertaking.Now right? they energy, were we obviously we that

Mary Hall

what keying And to whether healthier forward. assess volume been environment we're improvement, demand it was off is going we've to try seeing of a which

Operator

Loop from from Kapsch comes question next The Markets. Capital Chris

Christopher Kapsch

of I follow-ups. couple have a

]. in [ spec on First

obviously this the sticking understand So to get pricing inflation? great. the could probably get you there the you're business with spec you your pricing still that in but in and not I to have the that ability be competitive, the just business losses exiting, it's you'll And just is because most ability CTO characterize

John Fortson

Yes.

the the in we it's have feel enterprise, value are so does look with crude this sense because as So It a was of run of in are help market have centers comes site, we you advantage rosin road really money. the field then That's the positioned, is a mean, markets to it's I it right? those that into balance, yourself that a does you of It that's you around is that to exited have smaller that and that markets, rosin rosin, But aren't some the and use TOFA run competitors most doesn't stuff today I but lot and right?And it kind makes is the producing of And its Ozark footprint markets, those have us, you DeRidder. primary it. ton where pricing, right?And of issue function substitution, had that the to right? aggregate, get some it serving. obviously mean, vulnerable when needed what to that, end right? biggest the the because Chris, That's TOFA.But Charleston of know rosin right, have to plant's predominantly from to that some our because that describe as respond our because relative help the but right? markets also we better right? structure to I ask cost tall like selling but at speaking, when in rosins DeRidder with make like way out made where industrial have that rosin for highly in predominantly mostly more call in the CTO, things applications would what rosin of you of that's really is deal rosin, traditional sort really CTO generally problem oil economic We TOFA. end it's technologies, they than it a the that right? that a and oil-based we the best

Christopher Kapsch

then there getting the Yes. model have low-purge just play benefit think where in both you're engine sense. well I'm to for I got as way curious technology your as much Makes it. from any hybrid PM discussion. technology? follow-up that's segment of the the you if you're And how I on just is the new was the characterize mix advance IP, around maybe lift, extent to hybrids your getting at the products platforms.

John Fortson

best on to... sales your patent today? covered new are of way the percentage What Probably

Stuart Woodcock

levels level carbon low themselves activated X which right? it's America, extremely need, those, North you with to of a within and cases you're help, looking there's Yes, As requirement, patent a lot canisters high a honeycombs. protection across get Tier in but of the

content those And honeycombs vary our help to the products the efficacy. help Tier looking canister that Some on to OEMs Xs we and they're right? system their into, of design and the put

John Fortson

Chris, hybrid And North most that's important, America today. is because push of this in

Stuart Woodcock

Yes. With China X coming along...

John Fortson

right? Eventually China, in Right. benefit we'll

Stuart Woodcock

Right.

Operator

I'll call closing for John have no so the to back questions, further Nypaver remarks. hand We

John Nypaver

Ingevity you and your you all Thanks, our Adam. Well, concludes in for interest again we'll Thank with this next quarter. talk call.

Operator

call. for very attendance. This you concludes much Thank today's your

now may disconnect your You lines.

Ingevity (NGVT) 2 May 242024 Q1 Earnings call transcript